Mike Maguire: Yes, exactly right.
Bill Rogers: So, the list is pretty long.
Ebrahim Poonawala: Alright. Thank you.
Operator: Our next question comes from Stephen Scouten at Piper Stanley. Your line is open. Please go ahead.
Ankur Vyas: Stephen, are you there. Maybe, Jess, we go to the next person. See if Stephen can get back in after.
Operator: Absolutely. We will do that. We will go back to Gerard Cassidy with RBC. Your line is open. Please go ahead.
Gerard Cassidy: Thank you. Good morning Bill and good morning Mike. Can you guys share with us, you have got some good guidance on the operating leverage for 2023 being, I think Mike, you said about 3x the level of what you achieved in 2022. But I noticed that in the third quarter and fourth quarters, the operating leverage was higher than what you are hoping to achieve in €˜23. Can you share with us why there seems to be some slowdown in that operating leverage relative to the fourth quarter or third quarters of 2022?
Mike Maguire: Yes. Sure, Gerard. As we look into €˜23, I think a couple of factors. One, we €“ obviously, 2022 was a year where we had outsized, particularly in the second half, loan growth and net interest margin expansion, which obviously was a great tailwind on the revenue side. As we look into €˜23, we expect to continue to have nice growth from a year-over-year perspective, but we are expecting that NII trend to really stabilize. And frankly, we are going to begin to experience some pressure on the NIM side probably in the second quarter. From an expense perspective, we also mentioned, there are a few just structural expenses that are in the plan for €˜23 that when combined, add up to about 4% year-over-year change.
We obviously intend to make investments beyond those four categories in our clients and our teammates and in other strategic investment priorities. But that structural expense growth is there. So, again, we feel good about that sort of 2% with upside operating leverage guide and feel good about our €“ frankly, our revenue guide as well. So, hopefully, that’s helpful to you.
Gerard Cassidy: Good. No, I appreciate that. And then as a follow-up, many of you €“ or many of your peers and yourselves are obviously building up loan loss reserves. The outlooks that people are using, are calling for a weaker economy, but we don’t seem to be seeing that yet in any of the numbers. And if you look at the spreads in the high-yield market, they haven’t blown out. One of your competitors or peers, as they pointed out that the spreads in commercial loans still are pretty tight. So, I don’t know, Bill, when you talk to your customers, what are they seeing that maybe we might not see as much of a downturn as everybody is kind of forecasting right now later this year?
Bill Rogers: Yes. I mean I think you pointed out, I mean the data are confusing. There is just no doubt about that. I mean you see some positives and you see some negatives. If you look at €“ just think about the last few days, retail sales were not really very strong, sort of a poor Christmas selling season. You have seen inflation being a bigger part of what people do, and supply chain seems to sort of be reconciling itself. So, I think it’s more of a perspective, just €“ there has to be a higher impact from higher inflation. And whether that’s reduced hiring from our clients, whether that’s reduced capital investment, and all those type things. And in fairness, it’s a little more prospective. So, when we talk to our clients and we look at our portfolios today, things are great.
